AI Reshapes Capital Flows: "Startups in the U.S., Rising Government Spending in Korea" [Click e-Industry]

U.S. Hyperscalers Projected to Invest $1 Trillion Next Year
Rise of Single-Person Businesses Using AI: Productivity Gains Anticipated
Korean Semiconductor Boom Drives Higher Corporate and Income Tax Revenue

AI investment is not simply a matter of semiconductor and big tech stock prices. It is fundamentally shifting the flow of money, changing employment patterns, and influencing the government's capacity for spending. NH Investment & Securities has analyzed that, as AI investment increases, productivity in the United States is improving, while in Korea, government expenditure is on the rise.

First, the report diagnoses that AI investment in the United States is driving changes in employment. Capital expenditures by American hyperscalers such as Google and Amazon are expected to rise from $760 billion this year to $1 trillion next year. Both the size and the rate of increase of these investments greatly outpace those of China.

In particular, the increase in one-person businesses in the United States is noteworthy. The proportion of one-person businesses with annual sales exceeding $1 million has increased by 30% over two years. This means that AI is being used not only as a simple cost-cutting tool, but also as a means to boost individual productivity. This is why the prospect for improvement in U.S. productivity is the most promising going forward.

It is also difficult to say that AI demand has peaked. Last month, the growth rate of spending on large language model (LLM) tokens briefly slowed, but this did not signal a downturn. Rental prices for H100 chips continued their upward trend, and as it became harder or more expensive to obtain H100s, companies began seeking out A100s, driving up the prices of older chips as well.

The report also highlights the issue of debt among AI-related companies. Corporate bond issuance by hyperscalers has been rapidly increasing since last year. However, the average maturity of these companies' bonds is six years. Therefore, there is no imminent issue due to bonds maturing in the short term.

Of course, having a low debt ratio at present does not mean there are no risks. Historically, the debt-to-equity ratio of U.S. non-financial companies has remained low up to the verge of a recession or financial crisis, only to spike rapidly. However, compared to the late stages of the IT bubble, the current situation is more comfortable. Economist Ahn noted, "The ratio of corporate debt to U.S. GDP has tended to rise for several years ahead of economic recessions and financial crises, but over the past four years, this ratio has actually fallen. Currently, as U.S. corporate profits increase alongside higher levels of corporate bond issuance, this is serving to limit the decline in long-term interest rates due to supply and demand factors."

Korea's path is different. Rather than being a final-demand country for AI, Korea is positioned more as a beneficiary of the semiconductor supply chain. The current upturn in the semiconductor industry is larger than in the past, which leads to increased corporate profits. Growth in net profit among listed companies results in higher corporate tax, and expanded performance bonuses at Samsung Electronics and SK hynix can also translate into increased personal income tax. This means greater capacity for expanded government expenditure.

Accordingly, the report anticipates that the Korean government's contribution to GDP growth could rise by more than 0.4 percentage points going forward. If some corporate investment plans materialize, domestic orders for factory construction could also increase. In such a situation, with both government expenditure and corporate investment rising, the likelihood of the central bank shifting to a more accommodative monetary policy is considered low. Economist Ahn evaluated, "Currently, as AI-driven growth centered on the United States continues, Korea is entering a phase of expanded fiscal expenditure and benchmark interest rate hikes."

This content was produced with the assistance of AI translation services.